Upstate City Says ‘Cheese’

It is an unfortunate reality that there are very few suppliers of chalav Yisrael cheese products. As a consequence, the price of chalav Yisrael products is quite high. So when the plant owned by Moshe Banayan almost closed this week, it was a miracle that the right person was there to ensure that the plant continue to supply the Orthodox Jewish market with chalav Yisrael product.

Arthur J. Sciorra, the city manager of Ogdensburg, New York, experienced kosher food firsthand when he dormed in a home with two yeshiva students while he pursued his graduate studies. “I basically only ate kosher for two years of my life, and I remember the Sabbath meals and Pesach Seders,” Mr. Sciorra told the Five Towns Jewish Times.

The Ahava Cheese plant known as the “St. Lawrence Food Corp.” went into Chapter Eleven bankruptcy protection in April of this year, and owes creditors somewhere between $11 million and $50 million. “The creditors were planning to sell the plant machinery for five cents on the dollar to recoup their investment,” reported the city manager. Signature Bank of New York is seeking some $11 million.

Such a move would have caused a significant price hike in the chalav Yisrael cheese market, affecting prices from Far Rockaway to Kiryas Yoel. It would also have caused a loss of some 50–80 jobs in Ogdensburg. Thirdly, it would have affected upstate dairy farmers significantly in that Ahava is a major purchaser of locally produced milk.

The City of Ogdensburg, New York is located in Northern New York on the St. Lawrence River border with Canada. It has a port and an international airport. Ogdensburg is home to approximately 12,000 people, according to the 2000 census report.

Mr. Sciorra, the city manager, acted resolutely and responsibly by acquiring the Ahava kosher cheese plant. This move, in essence, saved the company because the city is committed to making sure that the plant stays open. “We also need a specialized niche market for this cheese, because there is no way that a small plant in upstate New York would be able to compete with such industry giants as Kraft Cheese. The kosher market provides the perfect niche market so that this plant could survive. “Chalav Yisrael cheese prices are quite high as is, with a 108-slice block of cheese reaching some $19 per block. “Prices are higher than they have ever been, and the market could not have tolerated the closing of one of the three major chalav Yisrael suppliers,” said a shopper at the Brach’s supermarket in Lawrence.

Higher prices for chalav Yisrael would affect all kosher consumers of other products too. For example, most pizza stores exclusively use chalav Yisrael cheese in their pizzas. “The price per pound of wholesale chalav Yisrael cheese for pizza is about $3.55 now. Although we do not use Ahava, it has always been about $0.50 less per pound than their competition,” explained Izzy Nakar, manager of Jerusalem Kosher Pizza on Central Avenue in Lawrence.

The Ahava plant is located at 30 Main Street in Ogdensburg. The city is now the owner of record of the land, the building, and the highly sophisticated machinery in the plant itself. The cheese product is still being delivered, the dairy farmers are selling their milk, and the citizens of Ogdensburg employed at the plant still have their jobs. The kosher supervisions are also still in place.

How did the city acquire ownership of the plant when there were big, experienced, banks trying to foreclose? “We utilized what is known as a tax lien forfeiture. The company owed approximately $60,000 in taxes. I merely filed the papers on behalf of the city,” explained Mr. Sciorra. “The essential issue at play here is that a city, any city, can move much faster than a bank when it comes to filing papers and foreclosing,” said Michael Edery, owner of Paradigm Funding based in Cedarhurst. It is evident from here that municipal tax liens always supersede private liens of any sort and can be acted upon with extreme swiftness if need be. That is why in 99 percent of cases lenders escrow for real estate taxes to avoid the precise scenario that occurred here.” Paradigm Funding is a nationally recognized real estate lending firm.

Although the banks lost out on this one, the people in the city of Ogdensburg clearly gained. There are still numerous hurdles that must be overcome to ensure that things will work out best for all parties involved. “The city, of course, is not in the business of producing chalav Yisrael cheese, or any cheese, for that matter,” explained Mr. Sciorra. Some sort of rental arrangement will have to be worked out between the city and Ahava or whatever entity will continue running the plant. In the meantime, the city of Ogdensburg is loaning the plant to Mr. Banayan.